Ruling Is Having a Big Impact on Commercial Leases

Date: July 31, 2018

In May, the Virginia Supreme Court of Virginia ruled commercial leases for more than 5 years must be under “seal” to meet Virginia’s “deed of lease” requirement jeopardizing hundreds of commercial leases.

Currently, leases for more than 5 years must be in the form of a deed which includes executing the lease under seal. To meet this requirement a lease can either include a seal which is required under Virginia common law or a seal substitute which is allowed under Virginia statue.

In the case of The Game Place LLC v. Fredericksburg 35 LLC, the court invalidated a 15-year lease because there was no seal or seal substitute even though both parties agreed to the terms.

The Supreme Court of Virginia has put the responsibility of amending the seal requirement on the General Assembly. NFIB Virginia will work with legislators to clarify the law.

Meanwhile, if you are a party to a commercial lease, you’re encouraged to review your lease to see if your lease is for more than 5 years. If it is, then you should see if it includes a “seal.” If not, you may need to consider signing an addendum with all parties to now include a seal.

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